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No, Apple Won't Become a Wireless Carrier (fortune.com)

Posted by msmash on from the not-my-cup-of-tea dept.

Don Reisinger, reporting for Fortune: Apple won't be competing with its carrier partners anytime soon. Speaking at Startup Fest Europe in Amsterdam during an interview on Tuesday, Apple CEO Tim Cook squashed rumors that his company is planning to eventually get into the cellular market to compete with the likes of AT&T and Verizon. "Our expertise doesn't extend to the network," Cook said. "We've worked with AT&T in the U.S., O2 in the U.K., as well as T-Mobile and Orange, and we expanded as we learned more. But generally, the things Apple likes to do, are things we can do globally. We don't have the network skill. We'll do some things along the way with e-SIMs along the way, but in general, I like the things carriers do."

33 comments

  1. "We don't have the network skill" by Anonymous Coward · · Score: 0, Troll

    You also don't have Phone skill, but that didnt stop you...

    1. Re:"We don't have the network skill" by halivar · · Score: 2

      Are you saying the phone calls I've been making on my iPhone are really just voices in my head?

    2. Re:"We don't have the network skill" by Plumpaquatsch · · Score: 3, Funny

      Are you saying the phone calls I've been making on my iPhone are really just voices in my head?

      Yes. Apple actually has telepathy enabling technology in their iPhones, that "phone" stuff is just a ruse.

      --
      Of course news about a fake are Fake News.
    3. Re:"We don't have the network skill" by Anonymous Coward · · Score: 1

      It's by far the worst phone I've had as far as call quality and coverage goes, but go ahead and tell me I'm holding it wrong.

  2. MVNOs instead? by Anonymous Coward · · Score: 1

    Ruling out becoming a carrier, fine. Logical. Even ruling out acquiring them. But has Cook ruled out an international collection of MVNOs? (Just as Virgin do).

    All round the world, as well as their own retail stores, Apple has Authorised Resellers. They are well-used to this sort of distributed operation. I can absolutely see them doing this.

    1. Re:MVNOs instead? by Anubis+IV · · Score: 1

      I'd say it's quite likely that Apple takes the Google route (e.g. Project Fi) and becomes an MVNO at some point, just as you suggested. After all, Apple likes to control the experience its users have, but right now their users have to interact with carriers, most of whom are rather crappy on a good day. Moreover, being able to commoditize the network by layering themselves on top of it allows them both push network costs for their users down while insulating their users from the network carriers, which is a win on both counts, plus they can do it without having to invest billions into infrastructure that would still come up short of what the carriers themselves offer.

      Frankly, I'm surprised they haven't done it yet, since Google has the right idea on this one, and by all accounts, Fi is pretty great if you're sold on the Android ecosystem already.

      Anyway, Apple says they have no interest in doing things all the time. Pay little attention. Steve Jobs famously said they had no interest in making phones while knowing that development of the iPhone was already well underway and had been for years. Getting in as an MVNO is low cost and seems like a natural next step at some point down the road.

    2. Re:MVNOs instead? by pesho · · Score: 1

      Google definitely has the right idea with Project Fi. Project Fi alone can make you buy into their android ecosystem. I have been using it for a few months. It truly shines when traveling abroad. For the first time in my life I feel like I have a real mobile device. I no longer need to swap sim cards or pay roaming (especially data roaming!). The other killer feature are the seamless wifi call integration. Helps a lot in area with poor wireless coverage (my home). It is beyond me why Apple will discard the idea so lightly. They are facing stiff competition both in the device and multimedia business. Integrating the network into their ecosystem is not a bad way to grow their business and increase the value of their current offerings.

    3. Re:MVNOs instead? by arglebargle_xiv · · Score: 1

      "There must be some truth to that rumour, they've called a press conference to deny it".

    4. Re:MVNOs instead? by stilwebm · · Score: 1

      An MVNO business is low margin (relative to iPhone margins) and requires a lot of marketing to become effective. If Apple were to launch an MVNO, they would have to massively increase their marketing budget for a low margin service, while competing directly with carriers that sell their phones AND provide their wholesale network access. Keep in mind average revenue per user is declining for wireless carriers and MVNOs. Apple has no interest in investing in a declining martgin service that hurts its ability to maximize phone sales.

      It's not an attractive business model for Apple, while it may be for Google. Google doesn't make hardware (not even Nexus devices), while Apple does - quite profitably. Apple depends on carriers to sell that hardware for profitability, while Google wants to increase software (Android) and search usage, and low cost network access does just that.

    5. Re:MVNOs instead? by Anubis+IV · · Score: 1

      But by that same logic, wouldn't you suggest that Apple should concede the virtual assistant space, the cloud storage space, the OS space, and any number of other product and service categories in which they operate, since they're also low margin operations? Mind you, I'm NOT trying to argue that logic is incorrect, nor am I trying to argue one way or the other about whether Apple should be in those spaces, but I do think they have a reasoning for being in each of them. Specifically, it seems to be that it's oftentimes not about making a profit on each individual service, so much as it is about making the high margin hardware that they sell a more compelling package.

      If I can buy an Apple phone and know that all of those products and services already "just work" together without having to create a multitude of accounts, get them talking to each other, or play the "watch as the carrier, manufacturer, and OS vendor blame each other" phone game when something goes wrong, that's a value-add for their high margin phone business that helps to set them apart from their competitors who provide piecemeal services and products that may end up costing more. Moreover, in my experience, MVNOs tend to offer much lower prices than you'd get on an individual basis from carriers, since they're buying data and minutes in bulk and passing much of the savings onto consumers. Even if Apple operated an MVNO at break-even for iDevice users, it'd increase the value of their devices drastically, encouraging more people to join the Apple fold. But even if it was priced a bit higher, carriers frustrate many of their customers, and I'd wager they could sign up millions of people (though certainly not me) who would be willing to pay a bit more if it means not having to deal with carriers directly.

      When the original iPad came out in the US, you could (still can?) sign up for a no-contract cellular data plan directly from within the Settings app and cancel at any time from within it as well, all without ever having to talk to a carrier, which blew a lot of people away. If they made that sort of experience the default one for their customers, it'd allow them to commoditize the carrier market by making them nothing more than dumb pipes, which would push prices down and allow them to provide a better experience to their customers. They may lose a little money or break-even on the endeavor, but if it helps them sell more iPhones, it'll be worth it.

    6. Re: MVNOs instead? by Karlt1 · · Score: 1

      I have T-mobile. Unlimited data, free roaming to lots of countries and Wifi calling.

  3. Everyone hates the network. by jellomizer · · Score: 1

    Whether it being an ISP, Fiber, Cable, Satellite, or Wireless. They all in general are disliked by the community.
    Why?
    1. Infrastructure is expensive. A lot of the bill goes to general infrastructure whether or not you use the service or not there is an infrastructure that needs to be in place ready to operate when you are.

    2. Monthly Costs. Needing access to the network means you need to budget for it over the long term. Unlike giving a one time fee for a device you keep on paying for it. So you feel the pain every month.

    3. Customer Support, usually if there is a problem, it is happening for a lot of people so customer service gets jammed. If there is a problem it will require sending over an individual with specialized equipment to fix it.

    Apple who has an image to maintain really would avoid the network like the plague, as it would kill its reputation.

    --
    If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    1. Re:Everyone hates the network. by jratcliffe · · Score: 1

      Good points.

      Also, I'd highlight that, in the network business, you really only get noticed when (a) you screw up, or (b) people have to pay you. Nobody gets home, fires up Netflix, and thinks "thanks Comcast, for providing me this high speed broadband connection that's allowing me to watch Netflix!"

    2. Re:Everyone hates the network. by kimvette · · Score: 1

      > They all in general are disliked by the community.

      You are correct in stating that, but the reasons you cited are inaccurate. They are hated because

      1. They advertise "unlimited" while enforcing an undisclosed limit, fingering the top n% users as "abusing" services
      2. They cut services and raise prices
      3. They deliver crappy devices (set top boxes with miniscule hard drives, cable modem/router combo units, etc.)
      4. They want to be treated as common carriers (no liability), but want to discriminate in what traffic they deliver to the customer
      5. They collect fees which are supposed to go into network expansion but refuse to expand
      6. Monopolies (blame both the lobbyists and the municpal politicians for that - lots of hands getting greased in that game!)

      --
      The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
    3. Re:Everyone hates the network. by jellomizer · · Score: 1

      Well I was trying to be nice. Stating even if they do the right thing they will still be hated.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    4. Re:Everyone hates the network. by Anonymous Coward · · Score: 0

      Everything you said applies to my power and water utilities too. And I don't hate them. AT&T, on the other hand, fills me with an unending sea of seething hatred. So yeah, you're just wrong.

  4. Apple as an MVNO - or more. by Zeio · · Score: 0

    Apple should buy one. They are in the business for overcharging for everything. Two benefits - they get to overcharge if they are carrier (like every other one) and they can make all the bandwidth use for all apple made applications free. Look at MVNO Google-Fi. They could potentially go quad-sim in the USA. (SIMs now are apparently capable of carrying more than one network).

    --
    Legalize the constitution. Think for yourself question authority.
  5. Translation by Marginal+Coward · · Score: 1

    Translation: "We don't like commodity businesses. We'll do some things along the way, but in general, I like the fact that we've got a lock on the highest-margin portion of the mobile phone business, and I like the things carriers do, such as competing to see who can invest the most in expensive mobile infrastructure in order to minimize their return on invested capital."

    1. Re:Translation by bluefoxlucid · · Score: 1

      I read that as "Apple won't become a wireless cancer" and that seemed legit.

      --
      Support my political activism on Patreon.
    2. Re:Translation by fortfive · · Score: 1

      There's something wrong with your translation, or their conclusion, as Verizon and ATT both have profits in the billions, while their infrastructure and bandwidth appear to be way behind other countries' options.

    3. Re:Translation by Marginal+Coward · · Score: 1

      I'll assume from that comment that you're not an experienced stock investor. I think you confuse "profits" with the term I used of "return on invested capital." Here are links to the the financials of Apple, AT&T and Verizon.

      Look at the bottom of each under the "Management Effectiveness" section. The numbers in that section and other numbers on those pages suggest that Apple, who is the most successful name-brand mobile phone producer, is earning several times as much money on each invested dollar as the other two, who are the commodity mobile carriers.

      Although not all corporate management is as smart as Apple's, Tim Cook and his colleagues would never deploy their capital in such a poor business as commodity mobile phone service when they can earn several times as much deploying that same capital in some form of their existing business - assuming they can come up with the next 'i'-whatever-it-is.

      That could change in the far future if Apple phones ever became commoditized the way Android phones are. For the time being, though, they are making a lot more money per dollar of investment than anybody who sells the carrier service those phones depend on. As the old song goes: Nice work if you can get it.

    4. Re:Translation by fortfive · · Score: 1

      I stand better informed. Thank you.

  6. They also said they wouldn't sell music by Ant2 · · Score: 1

    They also said they wouldn't sell music when they stole the Apple trademark from Apple Records.

    1. Re: They also said they wouldn't sell music by Anonymous Coward · · Score: 0

      Meh, I wouldn't call that stealing. At the time they were Apple Computers and Apple Records. Apple is a generic word, it shouldn't be trademarkable anyway.

      However, when they dropped the "computers" part and then started selling music... At that point they should have been sued into oblivion. I'm still confused on how they managed to avoid that.

    2. Re: They also said they wouldn't sell music by Anonymous Coward · · Score: 0

      They did get sued for that and it took 3 years before a judge passed their ruling in UK court: https://en.wikipedia.org/wiki/Apple_Corps_v_Apple_Computer

      Long story short: At the end of the day, Apple (Computer) bought Apple Corps trademark out in a settlement. Apple Corps got to keep using the trademark and was paid what was rumored to be 500 million. Apple dropped "Computer" from their name very close to the public announcement of the agreement, likely in part *because* of that agreement.

  7. Missed opportunity by tom229 · · Score: 1

    To own absolutely everything in the chain:

    Hardware -> operating system -> core software -> software distribution -> network

    I can see it now: iComm. Sure it costs 20% more, but it's cooler, and only works in the exclusive iPhone club. Jobs would have never missed such an opportunity.

    --
    If it ain't broke, don't fix it.
  8. Proof Enough that Apple is Evil by Anonymous Coward · · Score: 0

    Cook said. "We've worked with AT&T in the U.S."

  9. Legal reasons by BitZtream · · Score: 1

    I work for "a carrier", what Tim really means is that he doesn't want his entire company falling under laws that govern the telecom industry. You have a LEGAL RIGHT to privacy on any real carrier.

    This is why Google isn't actually a carrier for Fi .... It's not cause they can't do it, it's because doing so would absolutely destroy their business model since they are required by law ( in the US at least ) to not snoop on ANY COMMUNICATIONS within ANY COMPANY UNDER THAT CORP UMBRELLA. Meaning that every company Alphabet owns suddenly becomes bound by the same laws as the carrier.

    So Google buys services from a carrier and uses that to get around the issue. Google has.no legal obligations as a carrier and no protections either (common carrier only applies to real carriers)

    No one wants those restrictions, certainly not a high profile lawsuit target like Apple

    --
    Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
    1. Re:Legal reasons by Anonymous Coward · · Score: 0

      ....and the autism-hating troll shows its head again.

  10. "Our expertise doesn't extend to the network," by barc0001 · · Score: 1

    I'll say. They don't even sell servers any more after killing Xserve line in 2010.

  11. Apparently I can't Use "$" As A Title by sexconker · · Score: 1

    Even limiting it to the US, they'd burn through their money mountain bribing the government just to get permission to set up towers. This is an established industry and there's no breaking into it cleanly. The government is all about maintaining (and worsening) the status quo lately. Hell, look at AT&T + DirectTV. Apple would gain precisely nothing by doing this, and they'd have to piss away an ungodly sum just to step into the ring.

    A more realistic option would be to buy T-Mobile, but Apple wouldn't dare to be associated with a third-rate network. Apple's image demands that they're able to claim to be the best (regardless of whether or not they are).

  12. data plans by Anonymous Coward · · Score: 0

    Meanwhile in the glorious nation of Kazakhstan: http://s32.postimg.org/k1m6y13wl/P60229_033803.jpg

    45GB 4G data plan for $15